Healthcare and the competitive market structure essay

In a market socialist economy, firms operate according to the rules of supply and demand and operate to maximize profit; the principal difference between market socialism and capitalism being that the profits accrue to society as a whole as opposed to private owners.

Healthcare and the competitive market structure essay

See other articles in PMC that cite the published article. Abstract Purpose In all industries, competition among businesses has long been encouraged as a mechanism to increase value for patients.

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In other words, competition ensures the provision of better products and services to satisfy the needs of customers This paper aims to develop a model that can be used to empirically investigate a number of complex issues and relationships Healthcare and the competitive market structure essay with competition in the health care industry.

A total of 50 items of literature related to the subject were reviewed.


Various perspectives of competition, the nature of service quality, health system costs, and patient satisfaction in health care are examined Findings A model of the relationship among these variables is developed.

The model depicts patient satisfaction as an outcome measure directly dependent on competition. Quality of care and health care systems costs, while also directly dependent on the strategic mission and goals, are considered as determinants of customer satisfaction as well.

The model is discussed in the light of propositions for empirical research. Practical implications Empirical studies based on the model proposed in this paper should help identify areas with significant impact on patient satisfaction while maintaining high quality of service at lower costs in a competitive environment.

Competitive strategy, Patient care, Health services, Research 1. Introduction Within the health care industry, competition impacts several relational perspectives; with numerous studies reporting the impact of increased competition.

A PA since and creator of The PA Life Website. A National Health Service Corps Scholar and a graduate of The University of Medicine and Dentistry of NJ (Rutgers) PA Program and the University of Washington in Seattle, WA. The third type of market structure is an oligopoly. This type of market can be seen as being imperfect (where as a monopoly and competitive markets can be seen as being perfect). Healthcare and the Competitive Market Structure Essay - A competitive market is one that allows easy entry and exit: a market in which companies are generally free to enter or to leave at will. This does not describe the health care market in the US.

For example, several studies have examined the relationships between competition and quality of health care Zwanziger and Melnick, ; Enthoven, ; Kassirer, ; Chassin, ; between competition and health care system costs Robinson and Luft, ; Robinson and Luft, ; Robinson and Luft, ; Zwanziger and Melnick, ; Zwanziger and Melnick, ; Robinson, ; and between competition and patient satisfaction Miller, ; Brook and Kosecoff, These studies show that competition is capable of increasing value for customers over time.

Quality and process improvements lead to decreased costs, which in turn results in increased customer satisfaction. This paper reviews relevant literature and develops a model that can be used to empirically investigate a number of complex issues and relationships associated with competition in the health care industry.

While there are different types of customers within a health care system, we limit discussion of customers to patients. This research attempts to provide direction for the advancement of knowledge and practice in the field based on a number of considerations: This paper also reviews relevant literature on the impact of competition, particularly in regards to system costs, quality of care, and patient satisfaction; presents and discusses a research model of competition and patient satisfaction in health care with propositions for empirical research; and suggests directions for future research and practice.

The theoretical basis for this model takes a system approach to understanding the relationship between competition and patient satisfaction that recognizes the external environment as the catalyst for increased competition in the health care industry. Governmental regulations, political dynamics, changing social and demographic characteristics and ever-advancing technology are driving a major shift in the health care industry resulting in the disintegration of health care networks and intensified competition and cost pressures.

A key role of competition in health care is the potential to provide a mechanism for reducing health care costs. Competition generally eliminates inefficiencies that would otherwise yield high production costs, which are ultimately transferred to patients via high health service and delivery costs.

Fuch noted that during the s, the US government sought to change health care in America via the use of market principles to allocate scarce resources.

However, Reinhardt reported that competition could not enhance efficiency in the health care industry because public and private insurance companies were paying for three-quarters of the health care bills.

Likewise, Porter and Teisberg reported that competition in the US had become zero-sum-based, a situation in which health care system participants are actively engaged in dividing value instead of creating value.

In some cases, this type of competition erodes existing value through unnecessary costs. Porter and Teisberg identified several features of zero-based competition in health care associated with unfortunate strategic choices: Porter and Teisberg advocate a positive-sum competition in health care characterized by the following features: Although positive-sum based competition has many potential benefits, it is not an assured success because substantial reforms are required.

Nevertheless, competition remains a vital activity in the health care industry and consists of three components that encompass all the major stakeholders to include providers, payers, employers and patients.

The first component is comprised of individuals who provide health care e. Greenberg defined forms of competition for physicians. Physicians may also compete for affiliation with a PPO or by establishing an independent practice association IPA to ensure their patient flow.

Finally, physicians may compete in the medical market, by reducing competition from non-physicians such as psychologists and podiatrists. The second component is comprised of the organizations that provide health care services e.

Hospitals compete for physicians, third-party payers, and patients simultaneously Harris and McDaniel, In the past, hospitals competed for physicians by offering more highly trained supportive staff or better equipment.

However, current trends indicate that hospitals are more likely to compete for patients by providing more services, better amenities or discounted prices Fuch, The strong competition for medical talent and technology exists locally and globally. The places where cutting edge technologies and new medical discoveries have the most power in recruiting the best and the brightest medical personnel.

In the world of health care, organizations must consider physician migration and physician shortages in recruiting the best and brightest health care providers. The recruitment of physicians has always been challenging and especially so in the primary care specialties in rural and underserved areas.

A wise organization will look carefully at the age distribution of its staff and plan well ahead for recruitment needs. The third component comprises organizations that provide health care financing and insurance and health care plans e.

Buyers of insurance plans must be knowledgeable about the varying prices and must be able to make an informed choice when deciding on what plans to buy.One idea has been to instill competition in the health care markets to enable the industry to operate more like a traditional market.

on a competitive bidding structure in which private. Published: Mon, 5 Dec Dell’s competitive advantage is their direct customer focus and this has made the company one of the leading suppliers of technology and direct computer systems.

We therefore also describe the theoretical and empirical literature on the impact of market structure on quality of health care. The paper then moves on to consider competition in health insurance markets and physician services markets.

Market structure is best defined as the organizational and other characteristics of a market.

Healthcare and the competitive market structure essay

We focus on those characteristics which affect the nature of competition and heartoftexashop.comionally, the most important features of market structure are: We will write a custom essay sample on Perfect Competition Examples specifically for you for.

Market Structure: A Competitive Market Words | 6 Pages.

Market economy - Wikipedia

Market structure is about the number of competition that exists in a market among producers. The level of competition can be thought of as a continuous sequence with very competitive market at one end and the other end consist of market in which no competition exists.

The market structure of the health insurance and hospital industries may have played a role in rising health care costs and in limiting access to affordable health insurance and health care.

Competition in Health Care Markets